Raising the National Minimum Wage to (Almost) $12 per Hour

Earlier this week unfortunate Americans were shown the advantages of a functioning political system as the German government announced it would establish a minimum wage of $8.50 Euros or almost $12 per hour.

In the past Germany had had a minimum wage, but the extremely high level of labor unionization had ensured very high hourly wages for the overwhelming majority of ordinary workers. However, in recent years, an increasing share of new jobs had not fallen under these agreements, often being low-wage positions in the service-sector, and labor leaders had decided to address this growing problem by establishing a reasonable minimum wage for all workers as their top political priority. Business groups and conservatives initially resisted this proposal, arguing economic damage might result. But after considering the facts and the data, their opposition dissipated, and the cabinet of Germany’s right-leaning government has now adopted the idea, which will soon become law. Germany has one of the world’s best economies, with unemployment far below the American level and the standard of living well above.

From an American perspective, all sides in this debate behaved in an almost magical manner. On the one hand, the German unions deployed all their political influence to raising the wages of all workers rather than on focus their efforts on further augmenting the dollars and benefits of their own narrow membership. On the other side, business groups objectively considered the facts and decided that any resulting negative effects were too small to be worth waging a major political struggle, leading them to concede the issue. The notion of Capital and Labor cooperating together to advance the interests of society as a whole rather than battle for their own narrow special interests is a very strange idea in modern American society.

Indeed, America’s Democrats had made no effort to raise the minimum wage during the two years that they controlled both houses of Congress and now that they have recently revived the issue, they apparently have little chance of mustering the sixty votes they need to pass a $10.10 minimum wage in the Senate], let alone attracting the majority of Republicans required for a vote in the House. Some Democrats are considering a lower figure, but there is no sign there would be sufficient Republican support for that either. So our own Congress appears likely to remain deadlocked on the issue, while the German minimum wage shoots up to a figure over 60% higher than ours.

There are some efforts to raise the minimum wage in various American states, through legislation or initiative. However, most of these states are small ones and the proposed levels are usually in the eight or nine dollar range, well below even the $10.10 figure being considered in Congress.

The one major exception to this is California. A few weeks after my own proposed $12 minimum wage initiative began attracting considerable media coverage, Democratic legislators led by State Sen. Mark Leno of San Francisco topped it with a $13 per hour proposal, which recently passed its first legislative hurdle on a party-line vote.

Given that California’s cost of living is 30% above the national average, a $13 minimum wage for the Golden State is not at all an unreasonable figure. The Democrats hold commanding super-majorities in both houses of the Legislature and since the bill only requires a simple majority to become law, its chances would seem to be reasonably good. Indeed, two of California’s largest cities—San Francisco and Los Angeles—are considering raising the local minimum wages to a figure as high as $15 per hour, and such proposals have drawn the public approval of moderate and politically influential billionaires, whose words carry a great deal of influence in such matters as well as indications of strong public support.

Although I am obviously disappointed at the failure of my own $12 minimum wage initiative to make the November ballot, if my proposal played a useful role in spurring the Legislature to raise the minimum wage to something in the same range or higher, I’ll regard my $200 Filing Fee as having been very well spent.

A renewed focus on basic economic issues by the liberal wing of California’s totally dominant Democratic Party would anyway be a very welcome change from the situation of the last couple of decades in which avant-garde social issues have drawn nearly all the ideological enthusiasm and donor dollars. Meanwhile, the abandoned majority of ordinary California workers suffered under greater and greater economic hardships in their daily lives, leading to Golden State poverty rates that were the worst anywhere in America.

When we consider the initiative campaigns of the last fifteen years, I can’t recall a single one directly aimed at improving the economic lot of our state’s millions of working-poor, as opposed to giving them the right to smoke medical marijuana or send their children to voucherized schools.

Indeed, at the end of the 1990s one of California’s leading liberal consultants told me that the wealthy donors in his circle showed absolutely no interest in funding the sort of working-class economic issues that had once been central to the Democrat Party, and this explained the lack of ballot measures on such topics. Hilda Solis’s 1996 minimum wage measure had barely scraped together the dollars necessary for qualification before winning a landslide victory at the polls. Instead, that top Democratic consultant joked with me that the ideal initiative for attracting liberal dollars would be one entitled “Save the Gay Whales from Second-Hand Smoke.” But perhaps that is now starting to change, though not quickly enough to put my own initiative on the ballot.

Over the years it has become obvious to me that the political world contained a curious paradox, with important issues attracting either heavy funding or large public support, but rarely both. However, this contradiction is more apparent than real and a moment’s thought reveals the simple explanation of this seeming mystery. Any prominent issue that possesses both dollars and popular appeal is quickly victorious and therefore disappears from the political landscape,

Today in California, the polls show overwhelming support for a large rise in the minimum wage, and the idea has now been endorsed by multi-billionaires of the left, right, and center. Let’s hope that such potent combination of dollars and voter sentiment quickly produces enacted legislation and causes the issue to permanently vanish from the political radar screen just as would be suggested by my theory.